The fetal rat lung epithelial cell line (FRLE) was further characterized for its alveolar type II origin and used for studies on neoplastic transformation and on molecular mechanisms of cytokines and gene expression. FRLE cells, lipofected with plasmid pZipyK12yCys (carrying a K-ras oncogene with a Gly to Cys mutation on codon 12) resulted in 11 transformed cell lines, highly tumorigenic in nude mice and nude rats. Lamellar body-like organelles were disseminated in the cytoplasm of FRLE cells, aggregated in the transformed cell lines, absent in the solid tumors in nude mice, but present again in cells subcultured from the tumors, showing that neoplastic transformation had not abolished specific markers of differentiation. Presence of lamellar bodies was correlated with the expression of pan-ras p21 protein. Studies on the effects of crystalline silica on the FRLE cells showed marked dose-dependent toxicity of quartz and low toxicity of anatase (a non-fibrogenic titanium dioxide). The antioxidants, 2-PVPNO [poly(2-vinyl-pyridine-N-oxide)] and 4-PVPNO, were shown to inhibit quartz cytotoxicity in this cell line. Preliminary methods were developed for the neoplastic transformation of FRLE cells by crystalline silica and other carcinogens. ELISA assays showed that untreated FRLE cells secreted transforming growth factor beta1 (TGF-beta1), and the secretion of TGF-beta1 was increased in their neoplastic transformants. TGF-beta1 precursor was demonstrated immunohistochemically in neoplastic transformants of FRLE cells. Quartz was found to induce a marked increase in the secretion of TGF-beta1 by FRLE cells; 2-PVPNO also induced increased secretion of TGF-beta1; combined treatment with quartz and PVPNO, in spite of lowered toxicity, further increased the secretion of TGF-beta1. In untreated FRLE cells, secretion of TGF-beta1 was found to be linearly dependent on cell density, suggesting an autoinduction mechanism.